You are a newly hired business analyst with an engineering background. You’ve be
ID: 1110574 • Letter: Y
Question
You are a newly hired business analyst with an engineering background. You’ve been told to look at a company called Heritage Crystal Clean. To do so, please look at their 2012Annual Report at the site:
https://www.last10k.com/sec-filings/hcci/0001403431-13-000007.htm
Answer the following questions, based on your review of these materials (All answers are worth 5 points):
(1) What industries can Crystal Clean be described as being in (See the 10-K Annual report tab)?
(A) Environmental services (parts cleaning, waste management and vacuum truck management
(B) Zinc metals recovery
(C) Oil Business (used oil collection, used oil re-refining)
(D) Electric arc furnace dust recycling
(2) Which activities do you think are important for Crystal Clean to do well in to succeed (circle all that you think apply)?
(A) Finding sources of low cost electric arc furnace dust
(B) Understanding the laws governing disposal of used solvents
(C) Collecting used motor oil
(D) Re-refining used motor oil
(3) From a Porter’s Five Forces perspective, identify each of the following with the appropriate “Force” (Competition/Rivalry, Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of New Entrants, Threat of Substitutes):
(A) A competitor has announced a new synthetic lubricating oil based on an improved process that makes it from natural gas rather than re-refined lube oil or crude oil
(B) Two competitors announced they are expanding the capacity of their plants
(C) Buyers of re-refined lube oil are want to negotiate the price they purchase lube oil from you downward because they have many alternative sellers to buy from
(D) Used motor oil providers to the re-refinery want to negotiate a higher price
(E) Chevron has announced a new lube oil facility that is starting up this year in Mississippi
(4) What was Crystal Clean’s reported revenue for the full year of 2012 (see the Earnings Release tab)?
(A) $152.9 million
(B) $252.5 million
(C) $550,000
(D) $80 million
(5) Was there a significant addition to revenues from full year 2011 to full year 2012?
(A) This information is not available in the report
(B) Yes, a jump to $252.5 million from $152.9 million
(C) No, revenue growth was close to flat at 13 %
(D) The report only shows net income information
(6) Did cash provided by operating activitiesincreasefrom 2011 to 2012 (look at pg 52 in the 10-K Annual Report tab)?
(A) Yes
(B) No
(C) This cannot be determined
(7) Did total share holder equity increase from 2011 to 2012(look at pg49 in the 10-K Annual Report tab)?
(A) Yes
(B) No
(C) This cannot be determined
(8) Did Crystal Clean get cash in 2012 from issuing stock(look at pg 52 in the 10-K Annual Report tab)?
(A) Yes, but it is not shown in the table
(B) Yes
(C) It can’t be determined
(9) What did Crystal Clean do to promote growth (See the Earnings Release tab)?
(A) Expanded their Indianapolis re-refinery to 75 million gallons
(B) Shutdown the Indianapolis re-refinery
(C) Bought Mirachem
(D) Sold Mirachem since it was losing money
Explanation / Answer
Question 1
The mentioned report clearly indicates that Heritage Crystal Clean operates into two business segments.
1st business segment is the Environment Services Segment. This includes parts cleaning, waste management, and vaccum truck management.
2nd business segment is the oil business segment. This includes collection of used oil and re-refining of collected used oil.
Hence, the correct answer is the option (A) and (C).
Question 2
According to the assertion made by the Founder President and Chief Executive officer of Heritage Crystal Clean, Mr. Joe Calhoub, the company has to improve its efficiency with respect to collection of used oil as well as strengthening its ability to re-refine used oil in order to succeed.
Hence, the correct answer is the option (C) and (D).
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